Is hot payment startup Stripe worth half a billion?

By now, we’ve gotten used to bubbly tales of startups raising gobs of money at sky-high valuations. The latest is online payment provider Stripe, a company that launched its service less than ten months ago and is now said to be worth up to half a billion dollars after a new funding round of $20 million.

The truth is, the valuation is actually in the hundreds of millions, not quite half a billion dollars, according to people I’ve talked to. But it’s still a big number for a company that has been working largely in stealth mode and has yet to release any firm customer metrics. And it’s going against big names like PayPal, Visa and Braintree, which is already a favorite of many developers. So is Stripe worthy of the acclaim?

The short answer is: it may not be worth $500 million now but it probably won’t be long before it is.

The company, which has raised $40 million to date, is gaining great word of mouth in the startup community for its payment system. Stripe has created a very simple, next-generation platform for developers, who can deploy payments as if they were hooking up to Amazon Web Services or telephony provider Twilio. Stripe’s developer-friendly product has won over thousands of developers and emerging entrepreneurs, who are able to start taking payments in minutes. The company counts Foursquare, Shopify, 10gen, Fast Company and many others among its customers.

Stripe users don’t have to worry about storing cards, PCI compliance, supporting different card types or dealing with banks. They just work with Stripe’s API and they’re up and running.

“Amazon Web Services was interesting not just because it had better infrastructure necessarily. But by making it so easy and so flexible to build services, different things get built,” said Patrick Collison, who co-founded Striple along with his brother John. “We hear from users that because everyone on their team can use Stripe and because we handle so much stuff for them, we make it easy to launch things and experiment and they end up with different and better products.”

Early investor Ron Conway said at a technology conference in May that Stripe was one of his favorite startups, high praise from a man backing hundreds of companies. “Stripe allows any developers on the Internet, almost through a point and click interface, to enable credit cards on their website,” he said at the time. “It allows people to monetize immediately.”

He’s just one of many big name backers who are staking money on Stripe. General Catalyst led Stripe’s latest round with follow-ons from existing investors Sequoia and PayPal co-founder Peter Thiel. Redpoint Ventures, Chris Dixon and Box CEO Aaron Levie have also joined as new investors. PayPal co-founders Max Levchin and Elon Musk were also early investors.

Stripe is going up against some established players but the startup doesn’t necessarily see itself in competition with PayPal or Braintree. Collison said Stripe has been steadily winning business from new startups and businesses and doesn’t need to steal customers to be a success. That’s because the nature of online commerce is shifting rapidly and opening up new opportunities in the U.S. and abroad.

Now, thanks to platforms like Shopify and Etsy, there are thousands of creators that are launching their own online stores. Mobile is expanding the ability for online commerce to happen anywhere, at any time. And the rise of peer-to-peer start-ups like Uber and Airbnb are also opening up new business opportunities that didn’t exist ten years ago.

One of the biggest hurdles to realizing Stripe’s vision is the fact that it’s limited to the U.S. at present. The company has heard a chorus of requests from developers around the world who are waiting for their country to get Stripe support. Stripe last week launched a beta program in Canada, but there’s no time table for bringing the service to other countries. Collison said Europe is likely the next target after Canada.

Stripe could still hit a rough patch if the startup ecosystem collapses and the bubble bursts. But Stripe isn’t just focused on serving Silicon Valley, said Collison. He believes there’s a huge opportunity in facilitating transactions around the world.

“The overall market is growing so quickly we’d be totally fine if just only new businesses got started on Stripe,” Collison said.